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PE inflows in India real estate up 19% in FY21, investors eye portfolio deals across cities

  • Despite COVID-19, ~USD 6.27 bn pumped into Indian real estate in FY21, against USD 5.28 bn in FY20 – the highest since FY16
  • Unlike earlier, PE investors in FY21 eye portfolio deals across cities & assets rather than specific projects/cities; such deals comprise a 73% overall share
  • Avg. ticket size of PE deals up 62% – from USD 110 Mn in FY20 to USD 178 Mn in FY21
  • Foreign PE investors contribute 93% of total PE inflows – investments by foreign funds almost doubled from USD 3 Bn in FY20 to USD 5.8 Bn in FY21
  • Top 10 PE deals alone contribute 78% of total PE inflows in FY21, in FY20 they contributed 67%

Mumbai, April 15, 2021: Against all expectations, Indian real estate recorded its highest-ever PE investments since FY16. ANAROCK Capital‘s ‘Flux – FY20-21 Market Monitor for Capital Flows‘ highlights that despite COVID-19, more than USD 6.27 billion were pumped into the sector in FY21, as against USD 5.8 bn in FY20 – an increase of 19% in one year.

Unlike earlier, FY21 saw private equity investors focus majorly on portfolio deals across multiple cities and assets, rather on specific projects or cities. Such portfolio deals constituted 73% of the overall share, with approx. USD 4,583 million invested via portfolio deals in multiple cities

The average ticket size of PE deals rose by 62% in the fiscal year – from USD 110 Mn in FY20 to USD 178 Mn in FY21. Both structured debt and equity witnessed strong growth during the year at 84% and 15% respectively. Structured debt was largely towards portfolio deals instead of project-level assets.

Though FY21 was an unprecedented year due to the pandemic, foreign PE funds showed much optimism for India. As much as 93% of the total PE investments pumped into Indian real estate was by foreign investors. In actual terms, investments by foreign PE funds almost doubled from USD 3 Bn to USD 5.8 Bn in FY21. In contrast, domestic PE funds invested merely USD 300 Mn compared to USD 420 Mn in FY20.

Shobhit Agarwal, MD & CEO – ANAROCK Capital says, “Foreign funds are evidently very upbeat about India. High-grade rental-generating assets have attracted foreign investors in a big way during the year. Moreover, India has a strong underlying demand for office space with quality workforce and average rentals available at less than a dollar per sq. ft. per month.”

“Alongside, the successful REIT listings have provided a good monetising option for PE investors, leading to a stronger demand for good quality rental earning office and retail assets,” he says. “Good entry valuation coupled with the option to accumulate a healthy mix of portfolio assets have also driven this surge in foreign PE investments. During the year, PE funds like Blackstone and Brookfield have added a lot of assets to their existing portfolios, while others have takeover loan portfolios of NBFCs.”

Among other significant trends, the share of asset classes like commercial, retail and hotel has been very good. While the asset class-wise bifurcation shows lower percentage, when considered along with portfolio deals (where bifurcation is not available), the share of these assets classes is strong. Nearly 66% of the total inflows (USD 6.27 bn) in FY21 was across portfolio deals in multiple asset classes. In contrast, in FY20, out of the total USD 5.28 Bn total inflows, just 8% of the total comprised of portfolio deals.

The top 10 deals alone contributed nearly 78% of the total PE inflows in FY21 as against 67% in FY20:

TOP 10 DEALS IN FY 2021
Capital Provider Recipient Location Asset Class Deal Amount

(USD Mn)

Brookfield RMZ Multiple Portfolio 1,984
Blackstone Prestige Estates Multiple Portfolio 996
Farallon Capital & SSG Capital Edelweiss Multiple Portfolio 400
Apollo Global Management Piramal Capital Multiple Portfolio 350
Oak Tree Indiabulls HFL Multiple Portfolio 297
Carlyle Nxtra Data Multiple Data Centre 235
Ascendas Cybercity Developers Bengaluru Commercial 195
Varde Partners Phoenix Group Hyderabad Commercial 155
GIC Phoenix Group Hyderabad Commercial 142
DCCDL* Hines NCR Commercial 105
* DLF Cyber City Developers Ltd. (DCCDL) is a JV between DLF & GIC

Other Notable Trends

  • Among the foreign PE investors that remained major contributors for overall PE inflows in India, Canada and US-based investors pumped in more than 50% of the total foreign PE investments in FY21.
  • REITs enjoyed wider acceptance in the country; healthy fund raising continued in public market, REIT sizes – USD 608 Mn Mindspace & USD 514 Mn Brookfield India REIT
  • The Industrial & Logistics sector had strong investor support. Key emerging trends in this sector – rise of automation, urban multi-level warehousing, de-centralization, increasing business consolidation, and high demand for Grade A assets.
  • Data centres are becoming the new sunrise sector, gaining more attention from PE investors and strategic investors
  • Last-mile funding gaining momentum – SWAMIH fund and various foreign funds actively evaluating various options
  • Stressed asset resolution started seeing traction; NCLT cases started to move towards conclusion

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